Yo, Boss. You said that long term risk free rates are a good proxy for long term nominal growth rates of the economy. By the same logic, how should we arrive at long term nominal growth rates for an emerging economy with no long term bonds? Should we just convert the long term risk free rates of the US using inflation differentials? Should CRPs be applied at all?
Professor, if in calculating terminal value we divide CF after reinvestment with r-g, isn't it very similar with applying the multiple ?! For example, dividing with 0.09-0.03 is multipliing by 17, or 0.08-0.03 is multiplying by 20 etc. I know it sounds trivial, but TV formula is as simple as earnings multiple
Any value can be converted to a multiple of some metric. That does not make it a pricing, What makes it a pricing is when the multiple is obtained, as it almost always is, by looking at what other companies in the sector are trading at.
Thank you, you have helped to make it more clear for me. Value obtained by TV formula would be based on company's own cost of capital and expected growth , not by applying some sector multiple and compering it to others.
This is gold!
Starts - 1:58
Thank you professor for another interesting session. Stay Blessed always🙏
Yo, Boss. You said that long term risk free rates are a good proxy for long term nominal growth rates of the economy. By the same logic, how should we arrive at long term nominal growth rates for an emerging economy with no long term bonds? Should we just convert the long term risk free rates of the US using inflation differentials? Should CRPs be applied at all?
Is there explaination why reinvestment tied to sales, besides other ratio doesn't work?
Professor, if in calculating terminal value we divide CF after reinvestment with r-g, isn't it very similar with applying the multiple ?! For example, dividing with 0.09-0.03 is multipliing by 17, or 0.08-0.03 is multiplying by 20 etc. I know it sounds trivial, but TV formula is as simple as earnings multiple
Any value can be converted to a multiple of some metric. That does not make it a pricing, What makes it a pricing is when the multiple is obtained, as it almost always is, by looking at what other companies in the sector are trading at.
Thank you, you have helped to make it more clear for me. Value obtained by TV formula would be based on company's own cost of capital and expected growth , not by applying some sector multiple and compering it to others.
34:00
The name of one of your students is in the thumbnail, you might want to fix that. Great lecture, thanks.
7:25
Failure risk